The Ultimate Reasons for Going Into Debt Quiz

By: Staff

4 Min Quiz

Image: refer to hsw

About This Quiz

The reason most people go into debt is simply because they are living beyond their means. Learning some debt management skills may help you achieve financial security. Take this quiz to see how rich or poor your knowledge is of the reasons people go into debt.

Does income or assets determine eligibility for unemployment?

Neither income nor assets is used to determine eligibility for unemployment. Even millionaires may be eligible for unemployment benefits and many do collect.

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What percent of Americans spend more than they make?

Some 40 percent of Americans spend more than they make.

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What are payday loans?

To accept a payday loan you must give a post-dated check to cover the loan plus interest and fees. In return for paying high interest and finance fees, you get a cash advance against your paycheck, immediately. These loans are for times when you cannot wait for your paycheck.

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What are equity checks?

These are checks written against the equity in your home. The amount of the check is added to your existing debt that is secured by your home.

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What is an unsolicited offer?

An unsolicited offer is one you did not request. If you did not ask for it, do you really want it?

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Which U.S. entity established the Truth and Lending Act?

The U.S. Federal Reserve established the Truth and Lending Act.

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How does the Truth and Lending Act help consumers?

Creditors are now required to state all interest and fees, and must notify consumers of any changes in their terms.

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Why should consumers be wary of the small print on credit offers?

Creditors are looking to make a profit from your debt. Make sure to read all the information, including the small print.

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How do the 2009 U.S. poverty rates compare to other years?

The poverty rates in 2009 were the highest in the 51 years that poverty information has been tracked. This information is from the U.S. Census Bureau.

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Why do people with good credit histories receive lower interest rates on their debt?

People who have good credit histories are less of a risk for debt default.

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For the future, what financial model will position you best?

Saving part of your earnings and paying cash, rather than taking on debt, may give you a better financial future.

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In case of an emergency, how much savings do financial advisors recommend that you have?

Financial advisors recommend that you have at least six months or more of savings.

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What is the average saving rate for U.S. incomes?

On average Americans save less than six percent of their income.

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If people do not have savings, how do they pay for an emergency?

Most people have to go into debt to pay for an emergency. An alarming number of bankruptcies are due to the high cost of medical emergencies.

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How can a credit counselor help you with your debt?

Credit counselors negotiate with your creditors, and may be able to arrange better terms for your debt.

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What is debt settlement?

Debt settlement occurs when the creditor agrees to accept a lump sum payment that is less than what is owed and forgives the rest of the debt.

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How much does debt settlement cost?

If you hire a person to negotiate the debt settlement, the cost ranges from $100s to $1,000s.

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What is the reason most people get into debt?

Most people get into debt because of bad spending habits. Spending cash prevent you from spending more than you can afford.

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You have charged $500 on your credit card with an interest rate of 14.7 percent. If you pay $15 every month, how long will it take to pay off the purchase of $500?

It will take you four years.

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If a debt settlement company promises to have a substantial amount of your debt forgiven for a considerable fee, what should you do?

Before paying any debt settlement fees, make sure you research the debt settlement company. If an offer sounds too good to be true, it may be untrue.

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